Banking services have different functionalities all around the world. Keeping your everyday cash requires a bank account too. As the banking business requires to charge a fee on an everyday transaction or even on minimum balance, it is time to explore other banking options to save money.
On that front, there are two types of banking services that might help you in this regard. One is the Chime Bank, and the other is Credit Union. The latter is very prominent as it is functional for a long time, while the former is relatively new in this context of business.
Chime Bank vs Credit Union
The main difference Between Chime Bank and Credit Union is the criteria to join them. Chime Bank is open to all and any citizen of 50 states of the United States of America, while Credit Union is open to the cooperative society of an organization. The size of credit unions ranges from small to big, while Chime bank is just a single entity and that is owned by a Financial Technology Company.
Chime Bank is a banking services entity developed and operated by Fintech in the US. Chime bank operates completely over the mobile application and offers zero charges on opening accounts and transactions. You need not have any minimum balance to open an account too. Chime Bank is renowned for its accelerated direct deposit that can reach your account at least 48 hours early compared to other banks.
Credit Union is a financial cooperative that offers banking services to its members. It has fewer features compared to the traditional banks but has access to a wide range of ATMs around the world. Credit Unions are not publicly traded hence, higher interest rates. The best news is, the member of the credit union need not pay corporate tax for his earnings.
Comparison Table Between Chime Bank and Credit Union
| Parameters of Comparison | Chime Bank | Credit Union |
| Operations | Chime Bank is operated by Bankcorp or Stride Bank, US. | Credit Union is operated by its members. |
| Interest Rates on Savings | You can earn interest on every single penny you save in the account. | Interest rates are comparatively high than the traditional banks but must maintain a minimum balance. |
| Minimum Balance | No requirement as such | You must have a minimum balance in the account. |
| Physical Branch | No Physical Bank branch | Credit Unions have physical branches. |
| Overdraw facility | Available | Not Available |
What is Chime Bank?
Chime is a banking service offered by a Fintech firm. The banking services of the Chime Bank is provided by Bankcorp Bank or Stride Bank. As it is said banking services, it does not have many complicated account options as the traditional bank do. It does not have checking or savings account opening criteria as well.
The products offered by Chime Bank are
- Spending Account
- Savings Account
The best part about these accounts are, you don’t need to have an opening balance or qualification criteria to open an account. You can open the account with the help of them. And yes, mobile application and online banking is the only mode you can do banking with Chime.
Chime Bank has unique offers, unlike the banks. It has an overdraw facility if you receive funds to your spending account regularly. The bank can regulate the overdrawn amount can also reach up to $200. At the same time, a few features help you save money too.
The Savings account is automatically created, and you can save money in this account. As such, there is no fee as a monthly fee, nor you need any minimum balance to maintain. Save as you spend is one of the saving modes. As you spend on purchasing online, and the amount comes up to $20.70, the app rounds it off to $21, and the $0.30 is fed to the saving account.
Save as you get paid is another way to save your money. If you get paid $500 or more, 10% of the funds is redirected to the savings account, and you can save it alternatively. Chime bank offers higher APY and also offers a secured credit card service too.
What is Credit Union?
Credit Union is also a type of banking service provider but operated by a cooperative union. Traditionally, the credit union was maintained and developed by people of the same industry or a company or same locality. It indeed provides traditional banking services with higher interest towards the deposit.
Credit Unions were usually formed by bigger corporations and organisations for the benefit of the employees. The participants involved in the credit union, that is, the deposit holders, are the ones who maintain and operate the credit union.
Credit Union gives tax-exempt in earning and thus considered worthy by people. These days credit union has become public too. At the same time, you can become a member only by opening an account. Of course, the opening account requires a minimum balance, and there is a small amount charged on transactions too.
Essentially, the credit unions are formed to invite deposits for higher interest rate and offer loans to the employees with lower interest rates. There are charges that the credit unions charge, and the business shall run smoothly.
Credit Unions have very few physical bank locations. And a few lower budget credit unions do not have them too. This might be seen as a drawback. The two main advantages of being a member of a Credit Union is
- Corporate Tax is exempted from the earned money
- Earnings of every quarter are an increased and thus higher percentage of interest in savings
Main Differences Between Chime Bank and Credit Union
- The main difference between Chime Bank and Credit Union is the operational aspects. The Chime Bank is operated by a financial technology company, and any citizen of the US can join as an account holder while Credit Union is a cooperative developed by the corporations or a group of people and maintained by the members.
- Chime Bank has an excellent online presence, and the mobile application is the mode through which one can transact. However, Credit Unions have physical branches and also possess few online banking facilities.
- Chime Bank does not require any minimum balance for opening an account, while Credit Union requires the member to have a minimum balance.
- Chime Bank offers secured credit card facilities, and Credit Union offers low-interest loans for its members.
- Chime Bank helps the customers with overdraw facilities, and Credit Unions do not offer such services.
Conclusion
Banking services have transformed over the years. Attracting customers with incredible features is one side and bringing them as account holders with zero fees is on the other. The banks must look for ways to run the business smoothly, and the customers must not face the difficulty too. With the advent of technology, the customer experience in banking services has increased. The overdraw facility at Chime bank is praiseworthy, and at the same time, the loans offered by Credit Unions for its members is worth to be mentioned too.
References
- https://www.sciencedirect.com/science/article/abs/pii/0378426693900318
- https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-0416.2011.00166.x